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Friday, June 21, 2013

KNOW YOUR CMBS EXIT STRATEGY

Jack Mullen, Founder, Managing Director, SUMMER STREET ADVISORS, LLC

The CMBS market is on the rise with high levels of issuance and strong investor demand. For sophisticated investors, however, CMBS is not a simple commodity play. The key to beating the market on CMBS investment yields is understanding all the aspects of what you're buying--the state of the underlying assets, prospects for the geographic markets and property types represented in loan pools, and the ways that loans and pools are structured. Above all, investors should have an exit strategy in mind, and contingency plans in case of unforeseen events, before taking a CMBS position. Your exit strategy should serve as a guide in choosing the best CMBS product at the outset.